Labour brokers: Treasury is like Pontius Pilate - silent ahead of the imminent and obvious injustice

In response to a parliamentary question posed by the Democratic Alliance (DA), the National Treasury has admitted that it has failed to do any research on the economic effect of the proposed ban on labour brokers - a policy that would surely have severe ramifications for the economy if the ANC gets its way.

The Treasury's deathly silence on this issue simply isn't acceptable, given that the ANC's plans will almost certainly throw another 500,000 South Africans out of work. Given that the Treasury remains equally silent on the proposed National Health Insurance (NHI) scheme, one wonders if growing political pressure is stopping the Treasury from performing its mandate of interrogating the economic and fiscal effects of proposed government policy.

It is certainly no excuse to say that data availability prevents any serious attempt at research; surely it is the mandate of the Treasury to interrogate the economic effect of policy proposals from senior government officials - especially if calls for the banning of labour brokers have repeatedly been made by the Minister of Labour, Membathisi Mdladlana. To rely on research from the Department of Labour (DoL) is even less of an excuse - they refuse to publish commissioned research on the labour market even after DA posed a parliamentary question on it, and it is questionable whether their own research would be objective given the Minister's stance.

Ironically, the Treasury has also admitted to making use of labour brokers, and has paid up to R 11 million for their services in 2008/09 financial year, making up 8.4% of the total staff compliment for the year. The follow-up question is therefore very simple indeed: how will the operations of the Treasury be affected if they could no longer use labour brokers? If the Treasury isn't willing to do its own research, it can surely at least give us some estimate of the costs of banning labour brokers on its own internal structures?

The DA will be posing this matter as a parliamentary question.

We trust that the National Treasury will perform its mandate without fear or favour - to the benefit of South Africa. Technical excuses on data availability do not make investors feel any safer, and they do not help to inform policy makers who are about to embark on a risky course of action. It is time that President Zuma officially accepts the need for labour brokers in government in order to perform their mandate. Four government departments have already admitted as much. 

Dr D T George (DA) to ask the Minister of Finance:

Whether the National Treasury has conducted and/or commissioned a study on the (a) fiscal and/or (b) financial and/or (c) economic effects of the proposed banning of temporary employment services or labour brokers; if not, why not; if so, what are the relevant details?

NW1625E

REPLY:

The National Treasury to date has not conducted and/or commissioned any study into the fiscal, financial and/or economic effects of the proposed banning of labour brokers.

The principle difficulty for conducting such a study is data. To conduct such a study would require detailed data on the number of workers involved with temporary employment services or labour broking, the wages of these workers and some estimate for the number of workers who would lose their jobs if labour broking were to be banned.

The data currently available is very limited and where it does exist, it is often conflicting. For example, official data from Statistics South Africa Labour Force Survey indicates only a small number of workers (37 115) were employed by labour brokers in 2007, with a further 273 000 workers paid by contractors or agencies (Statistics South Africa, September 2007). This is in contrast to industry estimates which suggest temporary employment services or labour brokers employ 500 000 workers.

The Department of Labour has conducted research on labour brokers and temporary employment services. This research did not focus specifically on the fiscal, financial and economic effects of banning labour brokers, but was aimed more at evaluating the extent of atypical forms of employment and their effects in the labour market.

The Department of Labour is also responsible for the policy and legal reforms associated with temporary employment services.

Without better data, any study would be unlikely to provide accurate or valid insights into the fiscal, financial and economic impact of banning temporary employment services or labour broking. Nevertheless, improving employment conditions and increasing employment in South Africa are key objectives of government policy.

Statement issued by Dion George, MP, Democratic Alliance shadow minister of finance, October 12 2009

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